Royal Mail share price: JPMorgan maintains bullish stance on group

Analysts argue shares offer ‘most robust upside potential’

Royal Mail share price: JPMorgan maintains bullish stance on group

JP Morgan remains bullish on Royal Mail Group (LON:RMG), arguing that the postal operator’s shares offer ‘most robust upside potential’. The comments are a boost for the company, which deals with a number of challenges, including negotiations with a trade union over its place to overhaul its pension scheme.

Royal Mail’s share price has slipped into the red in today’s session, having given up 0.43 percent to 445.00p, as of 14:29 GMT, marginally underperforming the mid-cap FTSE 250 index which currently stands 0.07 percent in the red at 20,058.70 points. The group’s shares are down by nearly two percent this year.

JPMorgan bullish on Royal Mail

JPMorgan reiterated its ‘overweight’ stance on Royal Mail yesterday, while trimming its price target on the shares from 535p to 500p. Proactive Investors quoted the analysts as explaining that the postal operator’s shares appeared to offer the most robust upside potential among transport stocks, adding that the group’s valuation “continues to discount a sizeable related cash flow headwind” amid ongoing uncertainty related to wages and pensions.

The comments came after the privatised postal group recently disclosed that there had been progress in talks with the Communication Workers Union which had been threatening industrial action over Royal Mail’s plans to replace its defined benefits pension scheme with a cheaper alternative.

“Recent progress toward resolution bodes well along with the accelerating parcel growth, solid GPS profit reflected in first half results,” the analysts further noted, as quoted by Proactive Investors.

Other analysts on Royal Mail

Citigroup reiterated its ‘neutral’ rating on Royal Mail last week, without specifying a valuation on the shares. According to MarketBeat, the privatised postal operator currently has a consensus ‘hold’ rating and an average price target of 422.85p.v 

As of 14:58 GMT, Wednesday, 13 December, Royal Mail share price is 445.50p.

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